Sell or Rent Dublin 8

W

Wonderer

Registered User
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I would really appreciate advice. I have got fantastic advice here in the past and really love this website so thanks in advance.

We're considering selling our three bed home (principal primary residence) in Dublin 8 because we are at the end of a renovation project on another house in the commuter belt that will soon be our home. I've read the key post on the topic (Keep Apartment as Rental or Sell?) which was very useful
, and concluded that it was best to sell and contacted the estate agent and so on but had a little wobble today and wonder do I have more to consider since my existing mortgage is a tracker and the amount we need to borrow is relatively low too.

Here are the details

We have a tracker mortgage on our home so it's very affordable. We owe 226k on that mortgage and there are 15 years remaining. We have no other debt. It would sell for somewhere in the region of 530k. We need to borrow 180k to complete renovations on the new house. We will get that fixed at 2.1% from AIB over 15 years.
We have paid for the renovations so far with savings. Two kids. Two good permanent jobs 80k/ per annum each.

Reasons to keep Dublin 8 house
Emotional attachment (don't shoot me!)
Good rental return (even after tax?)
Kids could sell it in the future and have some money towards their own first homes (I know CGT is 33%)


Reason to sell
Prospect of being mortgage free at 40! The dream!
Good train service from new area so university accommodation for kids not really an issue.

Sincere thanks
 
Reason to sell
Not having a debt of 400k hanging over you.
Not seeing your home being turned slowly into a mess.
Not having to worry about tenants being 'good' and not calling you at 1am about a burst pipe.
 
A few questions -

1. What rent do you think would be achievable for the Dublin 8 house?
2. What did the Dublin 8 house cost to purchase and how long has it been your PPR?
3. What is the tracker rate? I assume the tracker mortgage is on the Dublin 8 home.
4. Is the 180k loan a mortgage? Is there any other mortgage on your new home?
5. Are you maximising your pension contributions?
 
You're both very good to reply and give thought and time to this. Much appreciated. Bought in the boom so house cost 437k plus 27k in stamp duty as first time buyers(which i still cry about!) renovations cost 20 k so it's standing us say 486k with solicitor's fees . It has been our ppr for 16 years. The 180 k is a mortgage yes. AIB 2.1% for green mortgage. Not sure about pension. State pension for the past twenty years that's about all I know!

Thanks
 
It's a bit odd that you don't know whether or not you have an occupational pension?
 
You have equity of €304k in the house. You could rent it for €27,600, which after tax and costs is approx €11,000 a return of 3.6%.

If you keep it you will be borrowing €180k at 2.1%. If you sell you will have €124k cash what would you do with that.

Is it worth the trouble ?

The issue comes down to your view on the future value of the house. No one knows what the house will be worth at some unknown time in the future but any gain will have very little CGT.

To my mind if you keep it you get a free bet on the price of property going up. If it goes down you can continue to rent.
 
Thanks a million Creme Egg for your work. The CGT was putting us off but I see what you mean about not having much to pay anyway given how much we paid originally.

Sorry I wasn't clear on pension, Protocol, I have a pension through work for twenty years I just don't know if it my contributions can be increased.

Thanks again
 
cremeegg said:
You have equity of €304k in the house. You could rent it for €27,600, which after tax and costs is approx €11,000 a return of 3.6%.

If you keep it you will be borrowing €180k at 2.1%. If you sell you will have €124k cash what would you do with that.
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I know you are sentimental about the house.

But if you like being a landlord then a much better use of the €300k equity would be to buy an apartment and get a yield of 8%-9%. Your net income will be much the same and you are de-risking a lot.

Your current plan involves mortgage of 226k plus another 180k for the renovations is still 406k overall debt and you could struggle if you lost one income or had a dud tenant who didn't pay for a year. Why have two mortgages when you can have one?
 
Wonderer said:
Sorry forgot to say rental €2300/ month
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That's not a particularly good rent for a €530k property and you will gradually reduce your shield from CGT if you turn it into a rental..

In your shoes, I would sell the Dublin 8 house and pay for the renovations to your new home (or pay off the €180k mortgage depending on the timing).

That will leave you with around €120k.

Yourself and your partner could then contribute €20k each to a pension for 2021 and €20k each for 2022 (I am assuming that neither of you has funded a pension for these years and that you are both in your 40s). And then continue to maximise your tax-relieved pension contributions going forward.

The remaining €40k could be set aside as a fairly generous rainy day fund or as an education fund for your kids.

Edit - sorry, I missed the clarification that you do have an occupational pension scheme. Do you have any scope to make AVCs? You get tax relief on contributions of up to 25% of your salary in your 40s, in addition to any contributions your employer makes to the pension fund.
 
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I hope the very generous people who provide these replies see this message now ...I'm not sure if they do but just wanted to say sincere thanks. You're so kind. I really appreciate it. You've given me more than enough information. Long live askaboutmoney !
 
NoRegretsCoyote said:
I know you are sentimental about the house.

But if you like being a landlord then a much better use of the €300k equity would be to buy an apartment and get a yield of 8%-9%. Your net income will be much the same and you are de-risking a lot.

Your current plan involves mortgage of 226k plus another 180k for the renovations is still 406k overall debt and you could struggle if you lost one income or had a dud tenant who didn't pay for a year. Why have two mortgages when you can have one?
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Great feedback everyone. NoRegretsCoyote, your plan sounds very sensible. Releasing the equity to buy an apartment wasn't something I had considered at all. Very good point about just having one mortgage and derisking. Especially as the house is 1930s so will need money again soon . The mortgage we have on the house we'd be selling is a cheap tracker so maybe i was just thinking of keeping it for that reason too.

Thanks sincerely
 
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